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Pakistan’s foreign exchange reserves jumped to a two-month import cover after receiving the first installment from the International Monetary Fund’s $7 billion Extended Fund Facility, State Bank Governor Jameel Ahmed said on Wednesday, giving the fiscally-challenged country’s external position a much-needed boost for now. 

The central bank received the first tranche of $1.03 billion (SDR 760 million) on Monday, September 30, 2024.

Pakistan had been working on implementing conditions deemed “strict” to complete the loan programme agreed to in July, which Prime Minister Shehbaz Sharif time and again hoped would be Pakistan’s last.

The liquid reserves now stand at $10 billion, providing much-needed stability to the country’s foreign exchange position.

“The foreign exchange reserves have stabilised, and we expect further improvements,” Ahmed said speaking at a banking conference.

The central bank chief highlighted that the recent IMF disbursement has eased pressure on the rupee, ensuring a smooth supply of dollars in the market.

“[Overseas workers’] remittances have increased, and the supply of dollars has improved,” said Ahmed, noting that a decline in inflation has positively impacted monetary policy.

The governor expressed satisfaction over the government’s fiscal situation, which he said had also improved.

“The rate of borrowing from banks has decreased,” he further stated.

Dispelling the impression of a holdup in repayments to commercial banks, Ahmad said the government was not short of funds. “We are making early repayments of bank loans,” the governor said.

Ahmed also briefly outlined the central bank’s strategy to modernise Pakistan’s banking sector, underlining that promoting innovation in banking could spur economic growth.

“We aim to launch fully digital banking by 2025,” he said, noting that the initiative will enhance financial inclusion and accessibility for millions of Pakistanis.

The SBP governor further revealed plans to expand Small and Medium Enterprises (SMEs) financing, with a target to increase the current volume from Rs550 billion to Rs1.1 trillion over the next five years.

This will support small and medium-sized enterprises, key drivers of economic activity in the country.

As the popularity of digital banking continues to grow in Pakistan, Ahmed acknowledged the rising risks of online fraud.

“Banks have been warned to strengthen their cybersecurity measures,” he said, stressing the importance of safeguarding the growing number of users, which currently stands at 12 million for mobile banking and was increasing at an annual growth rate of 70%.

The central bank governor pointed out that branchless banking was already serving 59 million customers, while the use of mobile and internet banking continues to surge, with internet banking growing at 30% annually.

The governor also highlighted the phenomenal success of Raast, Pakistan’s digital payments platform, which has so far processed transactions worth Rs19 trillion since its launch in 2021.

“Daily transactions on Raast now exceed 2.5 million, and the system is being linked with Middle Eastern software to facilitate low-cost remittances for overseas Pakistanis,” Ahmad noted, adding, “This will make it easier and cheaper for expatriates to send money back home.”

Citing the SBP’s ongoing push towards a more modern, digital-driven banking environment, Governor Ahmed said that innovation was the future of banking and a key factor in Pakistan’s economic development.

Amid incumbent government’s strenuous efforts to tackle multi-prong challenges faced by the country on the economic front, Finance Minister Muhammad Aurangzeb has assured the privatisation of Pakistan International Airlines (PIA) before the end of 2024.

Aurangzeb, while speaking to a private channel, said that the incumbent government will see to the privatisation of the national carrier along with three power distribution companies (Discos) before 2024 culminates.

The statement comes as PIA’s privatisation, previously extended till October 1, was “postponed” until October 31 with sources linking the deferment to low bidder interest, court cases, fleet ageing and civil aviation issues.

Last week, the sources told The News that the government intends to privatise more state-owned enterprises (SOEs) under the rightsizing policy with PM Shehbaz directing the Ministry of Privatisation and Ministry of Industries and Production to implement the plan.

They added that Pakistan Stone Development Company and Pakistan Automobile Corporation were marked for privatisation marked for privatisation.

Also, proposals were finalised for the privatisation of Pakistan Institute of Management, Khadi Crafts Development Company, Agro Food Processing Facilities, Leather Crafts Development Company, Morafco Industries, Southern Punjab Embroidery Industry and Gujranwala Business Centre.

It is to be noted that the finance minister chairs a high-powered Right-Sizing Committee constituted by the prime minister.

Elaborating on the privatisation process, Aurangzeb said that the outsourcing of Islamabad and Karachi airports would be made in phases.

He said that rightsizing and restructuring of some ministries and departments would also be completed before the next fiscal year.

Addressing the issues in the power sector, the minister said discussion was being made with Chinese authorities regarding the re-profiling of debt besides China Pakistan Economic Corridor (CPEC) projects.

Noting that the government was working on privatisation of sick units, power sector reforms, and all necessary have been taken to achieve the objectives.

All out measures are being taken to strengthen the economic sector of the country, he remarked.

For the first time in history, Pakistan and Russia on Tuesday signed a barter trade deal in Moscow.

Sharing a post on social media platform X, the Pakistan embassy in Russia said that on the sidelines of the Pak-Russia Trade & Investment Forum, a memorandum of understanding (MoU) on barter trade was signed between LLC “Astarta Agrotrading” and Pak Meskay and Femtee Trading Company and National Fruit Processing Factory.

It is pertinent to mention here that the first Pakistan-Russia Trade and Investment Forum is taking place in Moscow.

Minister for Privatisation Abdul Aleem Khan, in his remarks, on the occasion expressed the confidence that this forum marks the start of new bilateral relations between the two countries.

He said Pakistan-Russia have longstanding diplomatic and commercial relations. He said Pakistan attaches great importance to its relations with Russia, emphasising that both sides have a great scope of joint ventures in different fields.

The privatisation minister highlighted the attractive business environment offered by Pakistan. He said Pakistan constitutes the fifth largest market in the world and it has the most liberal trade and investment regime in the region, saying the foreign investment in Pakistan is fully protected.

“All our economic sectors are open for investment.”

In his remarks on the occasion, Pakistan’s Ambassador to Russia Muhammad Khalid Jamali expressed satisfaction that bilateral trade between Pakistan and Russia has crossed the one billion dollar threshold, saying this reflects the growing interest of both countries to enhance their economic and trade relations.

The ambassador said Pakistan views Russia as an important and reliable trade partner and looks forward to working with it to enhance economic relations.